Microeconomics Assignment Questions

dm42477 Chapter 7 Homework (HW 5) (2) They are not earning economic profits now because they did not account for the opportunity cost of their endeavor. The opportunity cost of capital is 10 percent of the $50,000 dollars annually, which is $5,000. When subtracting the cost from the revenue, an accounting profit of $2,000 dollars is found. The firm suffers a loss of $3,000 after adding $5,000 in opportunity cost. The opportunity cost of its own labor is also not considered. Therefore, the Northwestern students are not making an economic profit now. (4) a. Diminishing returns is when the marginal product decreases as a single variable factor increases, holding all other factors constant. b. The table does indicate a situation of diminishing returns because the marginal product of labor falls as the amount of labor increases. From 0 to 1 unit of labor, the marginal product is 5; from 1 to 2 units of labor, the marginal product drops to 4. This pattern continues as labor increases in the table ending up with a marginal product of 1 at five units of labor. (7) a. Marginal product (units of output) 10 5 MPL 100 300 Units of Labor dm42477 b. This graph does exhibit diminishing returns. The marginal product decreases from 10 units to 5 units after 100 units of labor have been used. (12) a. Number of Workers (per Week) 0 1 2 3 4 5 6 7 Number of Repairs (per week) 0 8 20 35 45 52 57 60 MPL APL 8 12 15 10 7 5 3 8.0 10.0 11.67 11.25 10.40 9.50 8.57 b. Between 1 and 3 workers, there are increasing returns to labor since the MP L increases as workers are hired in that range. From 3 to 7 workers, there are diminishing returns to labor since the MPL decreases as workers are hired in that range. Since MPL is always positive, there is no range of labor input where returns to labor are negative. c. Marginal product is greater than the average product for the 2 nd and 3rd workers. Average product increases as the 2nd and 3rd workers are hired. d. Marginal product is less than the average product for the 4 th, 5th, 6th, and 7th workers. The average product of labor decreases as these workers are hired. dm42477 (15) a. Daily Output 100 150 200 250 Technology 1 $860 $1,100 $1,280 $1,540 Technology 2 $800 $960 $1,140 $1,400 Technology 3 $820 $900 $1,080 $1,340 As indicated by the table, Technology 2 is the cheapest for the output level of 100, and Technology 3 is the cheapest for output levels 150, 200, and 250. b. Daily Output 100 150 200 250 Technology 1 $580 $700 $840 $1,020 Technology 2 $600 $680 $820 $1,000 Technology 3 $660 $700 $840 $1,020 For the output level of 100, Technology 1 is now the cheapest. For output levels 150, 200, and 250, Technology 2 is now the cheapest. c. If the firm moves from a high-wage to a low-wage country and continues to produce at an output level of 200 units per day, it will change from Technology 3 to Technology 2, which is the cheapest technology in the low-wage country. This change in technology usage increases employment from 6 units of labor associated with Technology 3 to 8 units of labor associated with Technology 2. In this situation, employment increases by two workers.

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Unit 1 - An Introduction to Economics, Efficiency, and the Market System

Chapter 1 - Limits, Alternatives, and Choices: What Is Economics and What Are the 5Es?

  • Reading Assignments:
    • Chapter 1 Appendix on Graphing: ALL
    • Chapter 1: ALL
    • Online Lecture: The online lecture is VERY IMPORTANT!
      http://www.harpercollege.edu/mhealy/eco211/lectures/microch1-17.htm
    • Ch. 3: "Efficient Allocation" pp. 58-59
    • Ch. 3 and 6: "Diminishing Marginal Utility" pp. 49 and 117
    • The Necessity of Choice -- HOW? -- Benefit Cost Analysis
      • Ch. 1: p. 5, "Marginal Analysis: Benefits and Costs"
      • Ch. 1: pp. 13-14, "Optimal Allocation" (especially Fig 1.3),
      • Ch 1: p. 14, "The Economics of War" (box)
      • Ch. 7: p. 158-159, “Last Word: Don't Cry over Sunk Costs - Sunk costs are irrelevant in decision making”
      • Ch. 5: pp. 108-109, "Society's Optimal Amount of Externality Reduction"
      • Ch. 22: p. 467, "Optimal Immigration"
  • Study Guide
    • Chapter 1
      • Multiple Choice: # 1-4, 6, 7, 10-12, 14-24
      • Problems: # 4, 5
    • Chapter 1 Appendix:
      • Multiple Choice: # 1, 2, 6, 11, 12 15, 16, 17
      • Problems: # 1a, 1b, 2a, 4
    • Chapter 5:
      • Multiple Choice: # 16, 23, 24, 25
      • Problem: # 5
  • Worked Problems: 1.1 and 1.2 at http://highered.mcgraw-hill.com/sites/0077337735/student_view0/chapter1/worked_problems.html
  • Web Quizzes
  • End-of-Chapter Questions and Problems:
    • Chapter 1: Question 1, 2, 5, 7-11; Problems 1, 3, 4, 5, 6, 7, 8;
    • Chapter 1 Appendix: Problems # 1, 2, 7, 8
    • Chapter 7: Question # 11
    • Chapter 5: Question # 11

 

Chapter 2 - The Market System and the 5 Es

  • Reading Assignments:
  • Study Guide: Chapter 2
    • Multiple Choice: # 1, 2, 3, 6, 7, 9, 11, 12, 13, 19-25
    • Problems: # 1, 4
  • Web Quiz: Chapter 2 # 1-9 at http://highered.mcgraw-hill.com/sites/0077337735/student_view0/chapter2/quiz.html
  • End-of-Chapter Questions and Problems:
    • Chapter 2: Questions #1, 3, 5, 9, 10, 11, 13

 

Chapter 3 - Demand, Supply, and Market Equilibrium -- and the 5Es

  • Reading Assignments:
  • Study Guide
    • Chapter 3
      • Multiple Choice: # 1-28
      • Problems: # 2-6, 8
    • Chapter 3 Appendix
      • Multiple Choice: #1-8, 11-15
      • Problems: # 1, 2
    • Chapter 5
      • Multiple Choice: # 1-6
      • Problems: # 1, 2, 3, 4
  • Worked Problem 5.1 and 5.2 at http://highered.mcgraw-hill.com/sites/0077337735/student_view0/chapter5/worked_problems.html
  • Web Quizzes
  • End-of-Chapter Questions and Problems:
    • Chapter 3: Questions # 1-9; Problem # 2, 3, 4
    • Chapter 3 Appendix: Questions # 1, 4-7; Problem: # 3
    • Chapter 5 Questions #2, 3; Problems # 1, 2

Chapter 5 - The Public Sector (Government)

  • Reading Assignments:
    • Chapter 3: pp 61-64, "Application: Government Set Prices"
    • Chapter 3: pp 62-63, "Last Word: A Legal Market for Human Organs?"
    • Chapter 5: pp 99-110, "Public Goods", "Externalities" and “Government’s Role in the Economy”
  • Study Guide
    • Chapter 3
      • Multiple Choice: # 29, 30
      • Problems: # 1, 7
    • Chapter 3 Appendix
    • Chapter 5
      • Multiple Choice: #7-12, 17-25
      • Problems: # 5-7
  • Worked Problems 5.1 and 5.2 at http://highered.mcgraw-hill.com/sites/0077337735/student_view0/chapter5/worked_problems.html
  • Web Quiz Chapter 5:  # 1, 2, 4, 5, 6, 7 at http://highered.mcgraw-hill.com/sites/0077337735/student_view0/chapter5/quiz.html
  • End-of-Chapter Questions and Problems
    • Chapter 3: Questions 11, 12; Problems # 7
    • Chapter 5: Questions 1, 4, 5, 7-10, 12, 13

Unit 2 - Elasticity, Consumer Decisions, and Costs of Production 

Chapter 4 - Elasticity

  • Reading Assignments:
    • Chapter 4: pp. 75-89, Elasticity
    • Chapter 4: pp 86-87, Last Word
    • Chapter 16: pp 347-354, "Tax Incidence and Efficiency Loss”
  • Study Guide
    • Chapter 4
      • Multiple Choice: # 1-17, 19-25
      • Problems: # 1-4, 6
    • Chapter 16
      • Multiple Choice: #14-24
      • Problems: # 3, 4
  • Worked Problems 4.1 and 4.2 at http://highered.mcgraw-hill.com/sites/0077337735/student_view0/chapter4/worked_problems.html
  • Web Quizzes
  • End-of-Chapter Questions and Problems:
    • Chapter 4: Questions #ALL; Problem 1, 3, 4, 5, 7
    • Chapter 16: Questions # 6, 7

 

Chapter 6 - Consumer Behavior

 

Chapter 7 – Businesses and the Costs of Production

Unit 3 - Product Markets: Decision Making and Efficiency

Chapters 8 and 9 - Pure Competition in the Short Run and the Long Run

  • Reading Assignments
    • Chapters 8: ALL
    • Chapter 9: 181-184, 186-192
  • Study Guide – Chapter 8
    • Multiple Choice: # 1-7, 9-20, 22-25.
    • Problems: # 1-3, 4 a & c
  • Study Guide – Chapter 9
    • Multiple Choice: # ALL
    • Problems: # 1 (ignore teh "quantity supplied column in the table), 2
  • Worked Problems 8.1, 8.2, 8.3 at http://highered.mcgraw-hill.com/sites/0077337735/student_view0/chapter8/worked_problems.html
  • Web Quizzes:
  • End-of-Chapter Questions and Problems:
    • Chapter 8: Questions # 1-7; Problem # 4
    • Chapter 9: Questions # 1, 3, 5, 6, 7, 9; Problems # 2 (skip the last question)

Chapter 10 AND 18 - Pure Monopoly and Regulation

  • Reading Assignments:
    • Chapter 10: ALL
    • Chapter 18: pp. ALL
  • Study Guide
    • Chapter 10
      • Multiple Choice: # 1-4, 6-16, 18-24
      • Problems: # 1, 2, 3, 4
    • Chapter 18
      • Multiple Choice: # 1, 7, 9, 10, 11, 14, 16, 18, 19
      • Problems: # 3
  • Worked Problems # 10.1 and 10.2 at http://highered.mcgraw-hill.com/sites/0077337735/student_view0/chapter10/worked_problems.html
  • Web Quizzes at http://highered.mcgraw-hill.com/sites/0077337735/student_view0/chapter10/quiz.html
    • Chapter 10: ALL
    • Chapter 18: # 4, 5, 8 , 9, 10 [What is wrong with question #8?]
  • End-of-Chapter Questions and Problems:
    • Chapter 10: Questions 2-9; Problems 1, 2
    • Chapter 18: Questions # 1, 5, 10, 12, 13; Problems # 2

Chapter 11 - Monopolistic Competition and Oligopoly

Unit 4 - Resource Markets: Decision Making, Efficiency, and Equity

Chapter 12 - The Demand for Resources

 Chapter 13 - Wage Determination (Appendix: Labor Unions)

Chapter 20 - Income Inequality, Poverty, and Discrimination

Chapter 22 - Immigration

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